Posted By:
Harry Wallace (HW)This is how reserves have been explained to me.
Say that an item has a reserve of $50,000 - the Mathewsown contract for example. The Sotheby's auctioneer will start the bidding and will continue the bidding all of the way to $47,500, whether or not there is acutally anyone willing to pay that price. They are allowed to bid on the item themselves up to that level. Then, they hope that a real person jumps in at $50,000 and then he owns it. Otherwise, it passes at $47,500 where the bidder could have been a real person, or just Sotheby's bringing the item up to that level on its own.
Can anyone with more knowledge confirm that this is how it works?